When you find yourself in a financial situation where you’re behind on credit card payments, medical bills, and other kinds of debts, you’re not alone. According to a 2019 survey by Bankrate, 30% of Americans find themselves with more credit card debt than they have money in savings. This kind of situation can indeed seem overwhelming and even hopeless. The good news is that there may be an option for you to erase your debt for less than what you owe through a process called debt settlement.

You can even negotiate the terms of this settlement yourself rather than by obtaining the help of an attorney or debt settlement company. Deciding whether to enlist professional help or not is a vital part of the process and can impact your final settlement.

What is Debt Settlement?

Debt settlement is an agreement negotiated by borrowers and creditors in which the creditor agrees to accept an amount that’s less than what is owed. The payment can either be made in a lump sum or through smaller monthly payments. It might seem strange that a lender would accept less money than what they are owed, but it’s logical from their perspective. Recovering some money from a borrower through debt settlement is better than collecting no money if a borrower simply stops making payments.

How is Debt Settlement Different from Bankruptcy in Athens?

Debt settlement and bankruptcy are similar, as both are designed to help deal with your debt by erasing or forgiving the money you owe. After both processes, your credit score will take a significant hit. Beyond those things, the processes are different, and knowing the differences can help you choose.

The most obvious difference is that bankruptcy is a transaction settled through the court system. Then the outcome is decided by a judge. Bankruptcy also stays on your public record for seven to ten years, depending on which type of bankruptcy path you choose.

Debt settlement, on the other hand, is a private transaction between you and the lenders. Where you work to negotiate a settlement to pay them less than what you owe, and they forgive the remaining debt. Because this is a private transaction, there isn’t any public record to contend with, but there is still a negative impact on your credit score.

Determine if You’re a Candidate for Debt Settlement in Athens

The ideal candidate for debt settlement is not someone who is current on their payments or could possibly pay their debts in full. However, if you find that the following statements describe your situation, debt settlement could be a good option for you.

• You can gather enough money to make a lump-sum payment or make smaller monthly payments for a shorter amount of time.
• You are more than 90 days late on your payments.
• You have a reasonable number of creditors.
• You can demonstrate a lack of ability to pay your debts in full.
• You understand the risks to your credit score.

If you determine that you are an individual or family who can benefit from the Debt Settlement process, some initial steps are beneficial for you to take. This is whether or not you choose to work with a debt settlement attorney.

Initial Debt Settlement Steps in Athens

To help you decide whether to seek professional help with the debt settlement process, it will be helpful to do the following.

Collect Detailed Information About Your Debts

The first step in the debt settlement process is to collect all the information possible about your debts and list it on paper or in a spreadsheet. This not only helps to make your work more efficient, but it also helps give you and any potential debt settlement attorney or company an accurate picture of your financial situation.

Include important information such as the name of the creditor, the amount owed, your monthly payment, and the interest rate you’re paying on the debt. Keep in mind that sometimes creditors sell your debt to other creditors when you fall too far behind on your loans, so you’ll need to be sure that all the information you list is current. This helps you or the professional you hire know who to contact to resolve your situation.

Finally, make a list of the debts you do not wish to settle if that applies. The goal is to be as thorough and complete as possible so you can obtain a clear and accurate financial picture.

Collect Information About Your Ability to Pay Your Debts

To be most effective at negotiating with creditors, you or your settlement representative will want to understand your ability to settle each of your debts. Knowing the amount of money you have to pay on your debts is as crucial as knowing how much debt you have.

Although there are some sources of income that are protected from creditors, such as social security benefits, most income will be considered usable for debt collection. To determine your monthly income accurately, include:

• Two or three paycheck stubs that represent an ordinary work week (no excessive overtime or time off).
• Information about your spouse’s income.
• Debts, both individual and joint debt with your spouse, co-signed loans, etc.
• Fixed costs such as rent, mortgage payments, car payments, etc.
• Variable costs, such as fuel, entertainment, groceries, and certain utilities.

Once you’ve collected this information, it should be easy to discover any extra income that could be used to pay off your debts. If you list all your debts and income and find no extra income, debt settlement may not be best for you.

Determine the Additional Costs of Settling Your Debt

Whether you choose to negotiate your debt settlement yourself or utilize the help of an attorney, you will incur additional costs. These costs could include late fees and penalties related to default. If you choose to work with an attorney, you’ll also pay fees for their work.

It can seem counterintuitive to think about paying money to an attorney or debt settlement company when your goal is to eliminate debt. But you could find, as you consider the ins and outs of the process, that the extra help could be beneficial.

Decide if You Wish to Negotiate Your Own Settlement or Hire Someone to Help in Athens

Once you’ve gathered all the information you need to get a clear financial picture, and after you’ve examined the costs associated with the process, you’ll need to determine how to proceed. Will you work through the debt settlement process yourself or will you choose to hire an experienced debt settlement attorney or company? The following are some things you’ll want to consider.

Benefits of Negotiating Your Debt Settlement Yourself

Though the task of debt settlement can be daunting, there can be some positives about negotiating repayment terms with your creditors. An obvious benefit is that you don’t have to pay attorney fees or pay money to a settlement company.

Negotiating your own repayment schedule with your creditors also keeps you in control of the process and can give you the potential to negotiate a settlement with a creditor who might refuse to work with a settlement attorney.

Benefits of Using a Professional to Help Settle Your Debt

There are benefits to settling your debt with the help of someone who has experience with the process. One important benefit is that, when enlisting the help of a settlement professional, you’ll have someone who can give advice or caution you against doing something incorrectly.

A debt settlement attorney will be sympathetic for your situation but isn’t likely to feel emotional about your debt. This dispassionate perspective can help you when it comes to negotiating with your creditors. Their rational approach, coupled with their inside knowledge of debt negotiations, can benefit you and could potentially save you money.

The debt settlement process can be time-consuming and overwhelming. If you have a job, a family, or both, allowing someone else to assist you in the process might be invaluable. They can spend time doing the legwork, leaving you able to continue working and tending to your family and other responsibilities.

Do Some Research if You’re Considering Using a Professional

Researching different debt settlement professionals is a critical part of the process if you choose to work with one. Debt settlement professionals that are reputable will disclose all program fees and costs before you sign up for a program. In addition, they can answer questions about how long the process might take.

A reputable company will also counsel you about the negative consequences of settling your debts. Such as a decreased credit score, extra fees or interest from creditors, and can caution you about the possibility of getting sued.

Hiring an Attorney vs Hiring a Settlement Company in Athens

You may be wondering which is better, hiring a settlement company, or hiring an attorney. There are some things to consider about this. First, a debt settlement company can be of benefit in some ways, however, they may not be likely to counsel you in other ways of eliminating your debt, such as bankruptcy.

Hiring a lawyer is a potential benefit if you get sued by a creditor. Your attorney will already understand your financial situation and will be able to respond to any lawsuit quickly. Additionally, an attorney will recognize if a creditor is violating the law in its attempt to collect from you and can tell you how you should proceed.

Contact an Experienced Debt Settlement Lawyer in Athens, GA About Debt Settlement

Can you negotiate your own debt settlement in Athens, GA? Yes. But if you decide you’d like to discuss your options with an experienced Georgia debt settlement attorney, contact Morgan & Morgan, Attorneys at Law, P.C.